Thursday, September 2, 2010

17th Consecutive Week of Outlow from Domestic Equity Funds

reports Zero Hedge:

Can You Hear Me Now? 17th Weekly Fund Outflow As Equity Fund Redemptions Accelerate (Tyler Durden, 9/2/2010 Zero Hedge)

"This is just getting silly: perhaps the next update on ICI mutual fund flows should occur if there is an inflow for once...ever again. In the meantime, ICI reports we have just recorded the 17th consecutive weekly outflow from domestic equity mutual funds, and what's worse for mutual funds' depleted liquidity ratios, it is now accelerating, hitting a total of $4.3 billion, a more than 50% increase from last week's $2.7 billion. YTD outflows have now hit $54 billion, as ever more capital is going into far safer fixed income instruments.

"...As for this being a contrarian signal, hopefully all those who see this as a buying opportunity can also find a way to make the now retiring baby boomers about 10 years younger and force them away from fixed income capital reallocation. Oh, and fix the broken market and restore investor confidence that the casino is only modestly rigged." [Go to the link above for the entire article.]

Here's the chart they have at Zero Hedge, plotting the fund flow against SPY performance. The significant outflow started right after the flash crash of May 6, when more retail investors saw the market for what it had become - a casino; my imagery of the day continues to be a black elevator shaft with no bottom to be seen.

But now that the retail investors are crowding into the bond funds, maybe the time is approaching when the big boys pull the rug and tank the bond market. Who knows...

BTW, speaking of a casino, Las Vegas Sands (LVS) shares are trading near 52-week high; it is at $30.07 right now. Not bad for a stock that went $1.38 on March 9, 2009. Things cannot be that bad, can they?


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